Europe can't ignore Chinese encroachment in Ukraine

If the spectre of Russian aggression to Ukrainian sovereignty and its well-founded hopes of Western integration – Kyiv was indeed at the forefront of the fight for European values - has been a test for the EU, both Ukraine and the European Union face another threat which neither seems to fully appreciate: encroachment by the People's Republic of China, which is actively expanding its economic foothold in Ukraine.

Zelensky's decision to sign a partnership agreement with China and join the Belt and Road Initiative (BRI) largely went unnoticed in Europe – even if the diplomatic rapprochement between Kyiv and Beijing is opening the door for massive Chinese investment in strategically important Ukrainian infrastructure.

In deepening commercial ties between the two countries, Zelensky's government is raising red flags not just for Western partners but also for civil society activists working on the ground in Ukraine.

China's growing economic footprint in Ukraine may already be producing geopolitical consequences that put the country at odds with core European priorities. Zelensky decided earlier this year to withdraw Ukraine's condemnation of Chinese government crimes against the Uighurs of Xinjiang, in what bore all the hallmarks of a quid pro quo to ensure deliveries of Chinese Covid-19 vaccines.

His government also recognised mainland Chinese sovereignty over Taiwan.

This is not to say that Ukraine is completely in thrall to Beijing. Kyiv has demonstrated some willingness to limit Chinese economic influence within its borders, blocking for example the attempt of a state-controlled Chinese company, Skyrizon, to take over the engine manufacturer Motor Sich.

'Debt trap diplomacy'

The dangers for Kyiv, however, go far beyond individual acquisitions. Instead, Ukraine could find itself trapped in yet another example of China's 'debt trap diplomacy', all while undermining its relationships with international financial institutions such as the IMF by accepting Chinese loans bereft of any conditionalities linked to the fight against corruption and the "de-oligarchisation" of the Ukrainian economy.

Kyiv's creeping embrace of China carries significant risks for Europe.

Beijing's intentions are transparent: beyond making Ukraine a key node of the BRI, China hopes to secure access to Ukrainian infrastructure assets (namely its ports) and the resources it needs to power its own economy, including Ukraine's food exports, as well as technologies it has not yet mastered itself.

Those food exports, as it happens, are a textbook example of how Chinese investments in Ukraine can impact the EU's own strategic imperatives.

For China, which faces the challenge of feeding 1.4 billion people and is the world's largest importer of food, food security is a foreign policy objective. The Chinese economy has imported over 100m tonnes of grain every year since 2014, and Ukraine plays a key role in the Chinese government's plans for using foreign agricultural output to make up for domestic land shortages.

In 2012, China's Exim Bank extended a $1.5bn [€1.29bn] loan to Ukraine's state-run grain and food corporation (GPZKU), in exchange for which the Ukrainian entity agreed to contract out its grain exports to a Chinese company.

Leasing land the size of Belgium

A year later, China's Xinjiang Production and Construction Corps was reported to have leased "five percent of Ukraine" (an area roughly the size of Belgium) to grow crops and raise livestock in Dnipropetrovsk, with Ukraine receiving Chinese agricultural equipment, fertilisers, and seeds in exchange for having its exports go to China.

While the Ukrainian firm involved in the latter deal denied the reporting, Chinese firms have reached comparable agreements in countries such as Brazil, Argentina, and Sudan. With this year's Ukraine-China cooperation agreement signalling a new uptick in Ukrainian barley, corn, and ultimately wheat and sorghum exports to China, EU markets are likely to see direct repercussions in terms of both high prices and reduced availability of staple crops like corn.

For the EU, China's sway in Kyiv presents three major challenges.

Firstly, while Europe seeks to counter Beijing's interests in Africa, it cannot ignore Chinese inroads into other corners of the European neighbourhood, like Ukraine and the Balkans.

Secondly, Chinese influence over countries like Ukraine compounds the more immediate threat represented by Russia, with the two countries forming an alliance of autocracies fundamentally opposed to European values.

Finally, it is of paramount interest for the EU to reinforce Ukraine's position within the community of Western liberal democracies, the undeniable aspiration of Ukraine's pro-European majority.

To address these challenges, the EU must adopt a coherent strategy to defend Ukraine's sovereignty, and prevent a situation where Kyiv is forced to turn to countries like China out of desperation.